October 7, 2022

LAST RESORT: Trump forced to use online-only bank to refinance looming Trump Tower loan

LAST RESORT: Trump forced to use online-only bank to refinance looming Trump Tower loan

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After decades of playing fast and loose with his financials, Donald Trump’s bill is finally coming due. A $100 million dollar one to be exact. That’s where AXOS and their CEO – major GOP donor Greg Garrabrants – come in, agreeing to refinance the loan just days after the Trump Organization’s own auditor resigned.

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Formerly known as Bank of Internet USA, AXOS has made a name for itself by providing funding to those whom other lenders won’t touch – and for engaging in questionable business and lending practices.

It’s something AXOS and Trump have in common.

Last September, the Trump Tower loan, guaranteed by Ladder Financial for a hundred million dollars, was up for repayment. With $1.3 billion in debt, his long-time accounting firm, Mazar, having dropped him as a client, and Deutsche Bank cutting ties with the six-times bankrupt former president, Trump’s options were severely limited.

According to the NYC Department of Finance, Eric Trump, as President of Trump Tower Commercial LLC, signed paperwork sealing the deal with AXOS.

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After Forbes published an article on the deal, Eric Trump made this statement:

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“Trump Tower is one of the most iconic properties in the world and sits on arguably the most prestigious corner in all of New York. We have incredibly low debt, have a tremendous amount of cash and have an extremely profitable company. We had no problem refinancing.”

$1.3 billion = low debt? Delusional much?

Trump isn’t known for his business acumen – or financial solvency – begging the question of why any bank would lend to someone who managed to bankrupt, of all things, a casino.

AXOS is no stranger to controversy surrounding its lending practices. The subject of several investigations since 2014 — including one from the SEC in 2017— the company has been under scrutiny by industry regulators. In 2015, former AXOS employee Charles Erhart, reported to the Office of Comptroller of the Currency concern over business practices by the company, alleging the company failed to disclose risky loans, had numerous compliance failures, and questioning the legality of loans made to foreign nationals.

Erhart also sent an internal memo in regards to the AXOS CEO. The memo — sent to head of compliance John Tolla — accuses Garrabrants of depositing third-party checks into his personal account and that of Garrabrants’ brothers. Tolla tipped Garrabants off. An SEC investigation failed to uncover any wrongdoing, and it was dropped.

Since becoming CEO, Greg Garrabrants has been under constant criticism, not just for the allegations of Erhart, but for his compensation. In 2018, he made $34.5 million as head of AXOS –  a company valued at $9.8 billion. For context, that is more than the CEO of JPMorgan Chase – Jamie Simon – whose salary that same year was $31 million. JPMorgan Chase is valued at $2.62 trillion.

It’s a salary that raised eyebrows — and complaints — with the board and shareholders over the generosity of and justification for such a payday.

Garrabrants has been a major GOP donor for a long time, donating upwards of $100,000 to Republican candidates over the years. A search on FEC.gov shows that Garrabrants donated, not only to Donald J. Trump for President and Trump Victory, but to Ted Cruz’s Senate and Presidential campaigns, to Devin Nunes’s Congressional campaign, to Senator Josh Hawley, and to the failed Senate campaigns of Georgia’s David Perdue and Arizona’s Martha McSally.

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The relationship between AXOS and the Trumps began before the $100 million loan. Jared Kushner secured several loans with the company. In 2018, AXOS funded a significant portion of a $57 million bridge loan to Kushner Cos. In 2021, they would lend Kushner and his business partner part of an $80 million loan.

Company whistleblower Charles Erhart was promptly fired after his allegations against the company and its CEO. He filed a suit that in 2020 Judge Cynthia Bashant referred to trial in a 90-page order. The trial begins at the end of this month.

The revelation of AXOS’ financial improprieties caused the company’s stock to drop to a 52-week low. With Trump’s never-ending legal and financial woes — coupled with AXOS’ less than stellar reputation — their current financial partnership is shaping up to be a match made in bankruptcy.

Follow Ty Ross on Twitter @cooltxchick

RELATED STORY:MYSTERY PRESENTS: State Department says that Trump failed to report foreign gifts in 2020

Ty Ross

News journalist for Washington Press and Occupy Democrats.

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